How to Lower Customer Service Costs by Using Social Media

Extending customer service is one of the seven business drivers of social media marketing. But customer service isn't just about making the customer happy, says Jason Falls, coauthor of No Bullshit Social Media: The All-Business, No-Hype Guide to Social Media Marketing. Using today's technology and web-based communications, social media customer-service efforts are one way to save direct hard costs on your marketing efforts.

From the author of

How Using Social Media Saves Money

If your organization is large enough to have a call center, then it likely has a relatively large budget to handle the associated expense. Think about it this way: Say the phone charge for a five-minute, inbound toll-free phone call is $0.50. Even a small call center operation takes in about 500 phone calls per day, which gives you a charge of around $250. Multiply that by 260 working days in a year and you've got a hard cost of $65,000. And that's a ridiculously low annual budget for the call center's communications.

Now think about staffing, man hours, and the operational costs of those employees. Add those amounts to the mix, and each call is costing your company $25$40. At the low end of that spectrum, you're spending around $3.25 million to have a telephone customer-support effort.

Now imagine that you could do something to trim that budget by 25% or more. Welcome to social media marketing.

Ridiculous? Hardly.

Companies with 250 or more calls per day to their call centers probably also have 100 or so conversations online daily about their product or service. Many of those conversations will be with dissatisfied customers who are trying to get help. This is where social media marketing offers a golden opportunity.

Using social media monitoring software (some of which is free), a single member of your customer support team can answer questions, address issues, and route unhappy customers vocalizing their displeasure online to the right person for a solution. Even a single staff person performing this function can reroute 2030 calls per day. That's minimum of $500 per day you don't have to spend!

Proof is found at companies all over the Web. From perhaps the most famous exampleFrank Eliason offering Twitter responses of "How can I help?" to those complaining on the microblogging platform about Comcastto more tucked-away ones@HumanaHelp responds to the health care company's customers who vocalize their issues on Twitter, toothere are examples all over the place.

Customer service is one of the most popular uses of social media among enterprise corporations, because of the cost savings. Forrester reported in January 2010 that Lenovo used online customer serviceengaging in conversations as well as responding to issues and requests on blogs and community platformsto align marketing, sales, service, and other departments, leading to a 20% decrease in laptop service calls, an increase in customer-service agent productivity, a shortened problem-resolution cycle, and higher net-promoter scores. Just the 20% decrease in calls would mean a savings of $650,000 in our hypothetical scenario.

Improvements can also go well beyond straight cost-savings. CareOne Debt Relief Services uses its social media team to conduct internal customer service for the members of its online community. By reaching out as a helpful resource to community members looking for debt relief advice, the company has tracked a 179% higher conversion rate for customers who fill out its consultation forms. That same group of customers, handled separately from traditional lead-in customers, is 217% more likely to make their first payment to the company.

Depending on how you implement and target it, customer service via social media can be a revenue driver as well as providing cost savings.